One weekend, in a last-ditch attempt to avoid disaster, top finance officials — representing 117 countries and six billion souls — come together and meet. The officials engage in intense — sometimes frantic — debate. They explore every possible solution known to modern man, plus some that are still not known. But they’re stumped. They come up with no new ideas. That’s when the highest finance official of the world’s second-largest economy speaks.

He can barely mask his frustration — and fear — as he calls for massive, unprecedented steps to stem a domino-like series of defaults.

He cites words such as “cascading default, bank runs, and catastrophic risk.” And he bluntly tells the group that time is running out!

But when the meeting adjourns, nothing has been done; no decisions have been made. Instead, the finance officials fly home to the far corners of the globe. They go home to their families. And secretly, they pray the financial collapse does not destroy modern society as we know it.

Unbelievable? Then Consider This …

This was not a fictional scenario. It actually happened EXACTLY as I just described — THIS past weekend!

The economy on the brink of financial meltdown is the European Union. With a GDP nearly $2 trillion larger than the GDP of the United States, it is clearly the biggest economy in the world.

The giant European banks buried in bad loans include France’s Crédit Agricole and Société Générale. With $3.6 trillion in assets between them, they are the largest in the world.

And the high finance official who issued the doomsday warning is none other than U.S. Treasury Secretary Timothy Geithner.

Speaking before the delegates to the IMF/World Bank meeting in Washington, D.C., this past Saturday, his warnings were shocking. So they merit repeating:

→ Cascading default

→ Bank runs

→ Catastrophic risk

→ Running out of time!

Why was he so blunt? What does he fear that average citizens are just beginning to comprehend?

Is it the utter fragility of the U.S. economy, still struggling to recover from its own debt nightmare?

Or is it the chronic vulnerability of America’s largest banks, still loaded with bad mortgages, still taking massive risks with derivatives, and still directly vulnerable to Europe’s debt disaster?

The answer: All of the above! But of greatest concern is …

The Fragility of America’s Largest Banks

Many investors seemed shocked when Moody’s downgraded Bank of America’s long-term debt from A2 to Baa1 last week.

But even with the downgrade, we believe Moody’s is being overly generous to Bank of America. The bank has …

• $421.7 billion tied up in mortgages — more than any other bank on the planet!

• $52.5 trillion in high-risk derivatives — more than 36 times larger than its total assets and nearly 341 times bigger than its risk-based capital!

• Massive exposure to the possibility that some of its trading partners in the U.S., Europe, or elsewhere might default — to the tune of 182% of its capital, according to the Comptroller of the Currency.

And it’s not alone! Other major U.S. banks are in a similar predicament.

Candidates for Disaster

It’s because of these kinds of dangers that, one month ago, I warned Bank of America was a candidate for bankruptcy.

And it’s also because of these dangers that I’m publishing here — for the first time — our latest list of the nation’s weakest large banks, based the latest second-quarter data recently released by the FDIC.

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Bank of America merits a Weiss Rating of D (weak). But it’s clearly not the only one. Also getting a D grade are two other giants — JPMorgan Chase and Wells Fargo.

Nor is this weakness restricted to the nation’s largest banks. Major regional institutions — SunTrust Bank, Regions Bank, Compass Bank, Huntington National Bank, and others — are also vulnerable.

All told, 2,553 U.S. banks and thrifts now get a Weiss Rating of D+ (weak) or lower, implying widespread vulnerability to the consequences of sovereign debt defaults in Europe and to a double-dip recession in the U.S.

How Could This Impact You?

In too many ways!

First, if you own bank stocks, you’re bound to lose a lot of money. Their shares are already plunging, and the experience of 2008-2009 tells us they could fall a lot more.

Second, banks and other financial institutions are the heartbeat of the entire economy. If they go down, so does business.

Third, if you have money in a weak bank, it could be in jeopardy. Yes, the U.S. government may come to the rescue. But because of scarce government resources and new, stricter bailout laws, this time around, any bailouts are bound to be more painful — to the bank, its shareholders, AND its creditors.

My recommendation:

1. Get your money to safety. If you must use a bank, do most of your business with those meriting a Weiss Rating of B+ or higher.

2. Never allow your deposits to exceed the FDIC protection limit.

3. For added safety and liquidity, seriously consider moving a big chunk of your cash from bank deposits and checking accounts to

• 3-month Treasury bills (which you can buy through your broker or directly from the Treasury) or …

Yes, I know Treasury bills don’t yield hardly anything. And I recognize that Uncle Sam’s finances are also shaky — a factor that could impact medium- and long-term Treasuries. But the Treasuries I’m recommending mature in only 13 weeks. And I believe the chance of the U.S. government defaulting on its debt within the next 13 weeks is nil.

4. The more bank stocks plunge, the more money you can make. And if a bank fails, the profit potential is enormous. But that’s just one way to use this great crisis as a great wealth builder